In the Right Ballpark? Assessing the Accuracy of Net Price Calculators

Abstract

Large differences often exist between a college or university’s sticker price and the net price of attendance after accounting for financial aid. Net price calculators (NPCs) were designed to help students more accurately estimate their actual costs to attend a given college. We assess the accuracy of information provided by selected institutions through their net price calculators. Specifically, we compare NPC estimates of financial aid to actual financial aid packages for a sample of low-income, first-year college students at seven postsecondary institutions which all utilize the federal template NPC. We find that NPC estimates of grant aid do correlate highly with actual grant aid, on average, but that the variation of individual financial aid packages among socioeconomically similar students can be substantial. We suggest two improvements to the federal NPC template. First, whereas NPCs sometimes present cost information that is several years old, it must be kept up to date. Second, NPC estimates should include information on the potential range of actual grant aid received, particularly aid provided by the institutions themselves, where we observe variation in aid to be the largest. Our findings have implications for federal policy related to NPCs.

Keywords: Net Price Calculator; College Cost

JEL Classification: I22